High Court quashes reassessment notice issued by jurisdictional AO instead of NFAC under section 151A scheme

5-Second Takeaway

The Court held that the section 148 notice was invalid because it was issued by the jurisdictional assessing officer, not by the NFAC in accordance with the section 151A scheme. It also held that the CBDT’s 1 August 2022 guidelines were only internal departmental instructions, not binding on the assessee or on the officer where they conflicted with the Act and the scheme.

The petition challenged a reassessment notice issued on 27 August 2022. The core question was whether, after the section 151A scheme, a jurisdictional assessing officer could still issue a notice under section 148 in the face of the prescribed process through the NFAC.

The Court held that the impugned notice was issued by the jurisdictional assessing officer and not by the NFAC, and therefore did not conform to the scheme framed under section 151A. It rejected the Revenue’s reliance on the CBDT’s 1 August 2022 guidelines, noting that the endorsement on those instructions showed they were internal and confidential departmental material, not a binding statutory direction under section 119.

The Court further held that those guidelines could not override the Act or the scheme made under section 151A. It also rejected the argument that the jurisdictional assessing officer and the faceless assessing officer had concurrent jurisdiction to issue section 148 notices or to carry out reassessment.

The Revenue’s reliance on the later office memorandum was similarly found to be inconsistent with the Act and the section 151A scheme. On that basis, the notice was treated as unsustainable.